If you employ workers in Israel, regardless of the size of your business, how many people you employ or even the nature of your business or it’s location, you need to read this blog post. It can literally save you legal hassle, fines and in extreme cases imprisonment ! (that’s right – imprisonment, you read correctly)

In attempt to enforce labor laws in more efficient fashion, the government passed several laws in recent years, the latest of which, will go into effect on June 19, 2012 and deals with severe repercussions against employers who are found to be in violation of these laws. This due to the fact that up until the law was passed, any violations by an employer required the affected employee to suit in labor court. This was a lengthy process that lasted years and was not effective in deterring employers. The government in it’s search for quicker punishment and stricter enforcement used a series of new laws. These laws give the Ministry of Industry, Trade and Labor the power to do surprise spot checks on employers, requesting to see documents, such as payslips, time-sheets, contracts and more. The enforcement of regulation is handled by a new department setup specially for this purpose. These laws cannot be waived by an employee and a contract that denies them or diminishes them is invalid and not legal.

To start with, the laws that are being investigated by the investigators are:

1.  Work and rest hours law

    There must be 8 hours break between work days and 36 hours between the last day of work in a week and the first day of work in the new week. Overtime must be paid for overtime hours worked – unless the employee was notified that there is no paid overtime, unless the employee receives prior written consent. Less than 8 hours between work days, the hours worked are all considered part of the previous day (overtime hours).

If there is no time-clock and an employee claims he worked overtime, it is the employer needs to be able to prove otherwise and refute the claim. If he can’t prove that the employee didn’t work the hours, (for example by producing the employee’s time-sheet) he will have a serious problem. If an automated computerized system does not exist, both the employee and employer need to sign the time-sheet each and every day !

 2.  Minimum wage law

   Base pay of at least 22.04 sh per hour (gross) or 4,100 sh per month (gross) – this obviously does not include travel expenses or other mandatory payments.

3. Mandatory pension law

For all employees after 6 months of tenure or immediately if the employee has an existing plan that is live (deposits were made in the last 3 months prior to start date with present employer. This needs to be itemized on the pay slip according to the % in effect, employee and employer portions as well as severance pay portion (employer).

4. Woman’s employment law

5. Youth employment law

6. Protection of wages law

Criminal offences are specified in section 25 b, including not issuing a payslip on time, issuing payslips that do not include all mandatory information, deduction of sums from an employee’s pay not in accordance with the wording of the law, not paying salaries on time, deduction of sums from an employee’s pay and not transferring them to the appropriate party to whom they are meant on time (social benefits, etc)

7.  Dealings with employment agencies
First of all, all employers who use employment agencies or third party companies (outsourcing) must ensure that they have a valid license to operate in Israel from the Ministry of Industry, Trade and Labor. Contracting a company who is not licensed is a criminal offense.

Secondly, the responsibility to ensure that the employees they employ on your premises receive minimum wage, payslips, overtime, etc is now your responsibility ! Any clause in a contract between an employer and an employment agency that stipulates the responsibility is the employment agency’s alone and that the employer has no responsibility or dealings with this – are rendered illegal and not valid – even if the contract was signed prior to the new law going into effect. What does this mean ? Well, basically, employers who employ workers via employment agencies (guards, cleaning staff for example) now need to reconstruct their contracts with the employment agency to include a clause that they can request at any given time, any document that will prove that the labor laws are being complied with for the employees they employ at the employer’s location(s). This means that your payroll controller needs to check the employment agency’s time-sheets and payslips periodically. Any infraction of the labor laws by the employment agency, the employer needs to send a letter of notification of the infractions and demanding rectification immediately or this will considered a breach of contract which will result in termination of the contract.

The idea behind this is simply that the place of employment cannot close it’s eyes and say that they are not responsible because they aren’t their employees. the employer hired the employment agency, so now he is responsible for this too. The consequences could be a fine for both the employment agency and the actual place of employment who hired them.

If you have questions about working with employment agencies, contact the Ministry of Industry, Trade and Labor – 03-7347425 (Efrat Gur) or  Hasdara-k@moital.gov.il

8. Foreign workers law

The Ministry of Industry, Trade and Labor published a foreign workers rights handbook on their site – You can read it in English here:

http://www.moit.gov.il/NR/exeres/C95B7D30-1105-47C7-85D8-17B26C284C31.htm

What happens if Moital’s regulation dept. finds flaws in any of the subjects ?

They can issue fines from 2.5k-35k for each misdemeanor for each employee, they can start legal prosecution of the employer and the CEO (or holder of position as it’s defined in the law) can be held personally responsible and be fined as well. The employer is not allowed to pick up the tab for the CEO (it is not a recognized expense) and it is forbidden to purchase insurance against this sanction. For many small businesses /employers this can be a serious threat to their existence – do not take chances !

To wrap this up, my advice to employers is simple:

1. Issue written notification to all employees on their terms upon start of employment and upon any change of their terms, including termination. Employer’s who have written contracts with employees should continue to do so in addition to this notification.

Example copies of these forms as well as what information needs to be included in them can be found on The Ministry of Industry, Trade and Labor’s website: http://www.moit.gov.il

2. If you do not have one, purchase a computerized time-sheet program (preferably one that is compatible with your payroll program) and inform all employees that clocking in and out is mandatory.

3. Make sure your employee’s payslips have a detailed breakdown of their vacation and sick day balances.

4. Make sure you are paying according to law and all payments are itemized separately on the employee’s payslips.

5. Company policy on various employment issues should be made public (sent out to all employees via email for example)

6. Make sure all employees  receive a hard-copy payslip each month.

Remember !
Not knowing the law is not a valid excuse and doing things properly will ensure you have no issues with the Ministry of Industry, Trade and Labor’s regulation department. Don’t say you weren’t warned.

Employers interested in consultation on implementation of issues contained in this blog, including determining a suitable time-sheet system or other payroll, labor law issues are welcome to contact me at: moshe.israpay@gmail.com

We are here to assist you in doing your job according to the law.